"The rating, of course, is the most important attribute of the activities of any reinsurer. And in this regard, we are pleased that both rating agencies with which we cooperate, at the end of the first full year of operations, confirmed their ratings assigned to our company last year. This, on the one hand, is a positive assessment of the successful start of our active work in the Russian market, and, on the other hand, the most important factor that we take into account in the further development of our operations in the region," MOKASHI Sanjay Vasant, General Director of GIC Perestrakhovanie LLC stated.
GIC Re Russia was established in 2018 as a wholly owned subsidiary of General Insurance Corporation of India (GIC Re), which previously operated in Russia through a branch operation. GIC Re Russia commenced underwriting business in September 2020.
The ratings reflect GIC Re Russia's balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management. The ratings factor in a rating lift from GIC Re, due to the implicit and explicit support that GIC Re Russia receives from the group.
GIC Re's commitment to its subsidiary is demonstrated by the provision of an unconditional parental guarantee and a 97.5% whole-account quota-share treaty. In addition, GIC Re Russia benefits from sharing its parent company's brand name and operational resources.
GIC Re Russia's balance sheet strength is underpinned by risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), which AM Best expects to be maintained at the strongest level through a forecast period of five years. The company's BCAR analysis takes into account AM Best's additional capital requirements for new company formations. The parent company, GIC Re, has injected total capital of approximately RUB 1.1 billion into GIC Re Russia so far, and further capital injections are expected to support business growth and cover start-up costs, if needed. GIC Re Russia has a conservative investment strategy, although AM Best notes the company's exposure to the high financial system risk in Russia. An offsetting factor in the balance sheet strength assessment is the company's relatively small capital base, which increases the likelihood of fluctuations in risk-adjusted capitalization.
The adequate operating performance assessment considers the group's five-year business plan and the performance track record of an existing book of business, which was previously managed by GIC Re and is now being underwritten by GIC Re Russia. AM Best expects GIC Re Russia to grow its Russia and regional portfolios gradually, although the company is likely to face strong competition from larger and more established peers.